"We aim to be a billion dollar company by 2010" : Harish Thawani Nimbus Communications Ltd executive chairman

When Harish Thawani announced he was handing over day-to-day management of Nimbus Communications Ltd (the company he incorporated in 1987) to Akash Khurana, it was met with two sorts of reactions. Most said that Thawani was not the sort to let go and there was some bigger strategy involved. Others said that Harry (as he is known in the corporate world) could afford to take it easy having made a killing on the cricket World Cup.

Thawani is more out of the country than in at the moment, mostly in London but he found time to speak to's Thomas Abraham at his Mumbai office while in the process of "clearing out his desk" as it were. Thawani says he has little to do (at least as far as India operations go) now that the company affairs are being managed by Khurana and his team. In a freewheeling conversation, Nimbus' executive chairman covers a wide range of issues and puts the record straight on his plans for the future.

First things first. About your handing over charge to Akash (Khurana). There seems to be a feeling within the industry that you have some deeper strategy at work here that will get revealed in due course. Your comment.

Well, let me start at the beginning, which is what are we setting out to do? We want the focus to rest on being the first Indian transnational company. Then we want to be a content company in the horizontal, vertical areas, which are television, sport, music and motion pictures. These are the four big drivers of the media and entertainment industry in terms of content.

Financially, we have set ourselves the target of being a billion dollar company by 2010.

Now, the question is why the billion dollar number and why 2010. We have seen over the last two years of our growth that if you are operating beyond just the home borders, then you are basically saying that a billion-dollar company has an insignificant share of the world market. I believe it is possible for Indian media and entertainment companies to build a sizeable business share. Not just us but other Indian companies that are looking beyond our borders will also develop sizeable businesses.

I believe we are far ahead of anybody else in India in the content space in terms of being able to create best practices, transfer knowledge to individuals across the board and have processes that drive them. A lot of time has gone in that over the last four-five years and I dare say that at times it has been at the expense of growth. This has obsessed us.

I think that we have arrived at that stage where we are saying, 'now we are set'. We have got the processes, people in place. I think that we have understood the media and entertainment business from the content perspective better than say, five years back.

And now you are ready to leverage that. Is that it?

We have been a good to decent content television producer for ten years. While we have had some spectacular highs we haven't had sustainability. We have had good beginnings in our motion picture business in terms of awards. It is Akash's leadership and his vision that creatively drives movies. So why not produce two movies in our first 18 months in the motion picture business.

I am emphasising the movie business because it has potential for explosive growth for Indian companies. Our movie making skills are not far behind the developed nations so to speak. So the journey for us as a company is to create a sustainable good product and be able to develop a global market mix for these products.

In recognition of that we identified that therefore we require strong leadership and strong focus on creatives. Sometimes we have lacked that focus. Our first number one show in India was in 1993. Our first show for Indian television was (Superhit) Muqabala. For five years it was the number one show in the country both by way of ratings and grosses.

Why did we not sustainably build on the back of that? Because, sometimes you become too focussed on sales and profitability.

In 1998, we made the first primetime TV soap opera in the country called Shakti. It was a raging hit. We replicated that and it went into Kannada, Telugu, Malayalam. We produce 18 daily soap operas and are the second largest producer here after Balaji. With all due respect to Balaji, their model was replicated on ours in the South but they built on that and they went quickly into the Hindi market, which we did not do. We did not do so because our creative skills at that stage in Hindi were not focussed on making products for the cable market. There was no driving leadership on the creative end in the company.

Is that where Akash comes in?

Akash has been here for many years. But he was more in a developmental role for motion pictures, overseeing television a bit, setting up training processes. We had not given him the mandate that we truly believe that the growth area for us is going to be content which is sustainably delivering results. Therefore creative leadership is important. That is the recognition we have arrived at over the past 12-18 months.

The decision for Akash to take over is not something new. We have been planning that over the past 12 months. The commitment I had was that I would see the World Cup through because that was a huge step forward for us in terms of business growth.

Because we have been involved with so many aspects of the World Cup be it event management, TV production for Sony, global distribution, sponsor services, airtime sales in India, it has been very rewarding for us. We have not yet heard a word of criticism from this event from the commercial part. The administrative part was also brilliantly handled. I have not heard one word about anything that was not world class or that went wrong. That was my internal commitment, which I successfully fulfilled. I look back at that as good corporate governance, which is building value for shareholders in a company.

"The movie business has potential for explosive growth for Indian companies"

Thawani at Century City, Los Angeles

Akash's vision is that we have a slate of eight films, which are fully scripted, financed. We are now in the process of casting and contracts before we launch them. They range from Hindi, Telugu and what is called crossover. You have pure international films made by our wholly owned subsidiary abroad.

Personally I do not have the ability to lead a content creation team on the motion picture side. Sure we understand genre and what works but I am not a writer. I cannot lead writers. That is not a leadership I can bring to the table. No matter how good I am at understanding distribution, exhibition, if my product is not right then my friends in the distribution trade will say sorry but there is nothing that I can do.

So having opened up distribution doors internationally we need to take the content forward and I believe that the eight films have the possibility of having hard product impact.

Similarly when you look at music. We have a distribution alliance with Sony music. We have got a good distribution company. They are a major in the world and in India. Nirvana Music's products have so far been excellent. The soft launches have gone well and we have to build on that. It comes back to creatives.

Even if you look at sports the next challenge in that sphere is going to be in the area of creatives. How are we going to produce good television because television drives sports.

"In three years, Akash will take over as executive chairman and he grooms the next chief executive for Nimbus"

What exactly will your role be now?

The best way to build a business is to identify what the core competencies are, differentiate between a shareholder, a chairman, whose role is far more strategic, and a chief executive. We felt that my stepping away and Akash taking over frees me to focus on corporate strategy and keep learning from global majors.

Akash has strong creative leadership, which we need. At the same time we do not want to be creative without the customer focus. Akash also understands marketing. Akash also has a doctorate in HR management. He has the people focus, creative knowledge and yet he is the head of marketing in a large Indian corporate. This is a dynamic combination.

So let me take over the implementation of strategy, the delivery of vision. Let me focus on corporate strategy and let me take my theoretical knowledge of the international markets as a string relationship that we have developed over a period of time with people and companies. Which then gets translated into strong commercial relationships and see whether we can deliver upon our 2010 vision of being a billion dollar transnational company. Maybe even earlier. Let me see if I can collapse that.

Very clearly this is going to require more business leaders in the company. Digvijay Singh will run the sports business, Akash Khurana will run the content business which have a domestic core both in terms of the consumer market and the creation process. We are scripting an international movie out of India although we are hiring writers from across the world.

Our international motion picture company is now going to be based in London. We are in the process of obtaining regulatory approvals for this. That is where my focus is going to be. Let us develop the alliances, relationships in the international markets for a product. If a product wants to go global we must have the ability to create distribution and exhibition alliances across the world. That is my immediate focus.

At the same time there must be a holistic corporate strategy we are building on. So there are separate strategic and operating rules. Eventually the shareholders role will be separate from the management's role. In three years, Akash will take over as executive chairman and he grooms the next chief executive for Nimbus.

"Our international motion picture company is now going to be based in London. We are in the process of obtaining regulatory approvals for this"

The motion picture company is close at hand and we have already identified a president for the company. When we create a distribution play in the next twelve months we will announce a chief executive for the global distribution business.

We see the business operating as Akash Khurana chief executive Nimbus India. He is the creative leader and company leader for the parent company. The Hindi cable space is Akash's challenge and I am sure that he will deliver on that.

The distancing of me from these operations has good positive and negative reasons. The agenda is strategic and has involved a series of complex moves. What you see is what you get. I am not selling out my shareholding. I know that I will be required to dilute my shareholding at a more strategic point for the company but it is not going to happen in the next few months. It will be at the time when we go for a distribution play.

For sports we have a whole distribution network both domestically and internationally. For me the strategy is to internationalise the business, contribute to corporate strategy and make sure that we have international distribution alliances. For the next 12-18 months that is going to be our entire focus.

With the World Cup behind you, at least on the sports front you will have a relatively quiet period ahead of you, is it not?

So what if the World Cup is over. Does nobody understand that, yes the World Cup is over, but we are doing four major ticket events this year? We have three home series productions to do including the Under-19 Cricket World Cup. Sri Lanka wants us back. We are evaluating their offer.

We've been signed on by the World Bowling Federation and we are managing the World Bowling Championships in Malaysia in August-September, doing the TV production and the worldwide distribution. We've just been signed on by the World Snooker Federation as the Asian leg franchisee.

In a quick rollout, we are bringing more golf events to India because of our affiliation through our partner (World Sport Group) with the Asian PGA. We will bring more events to India because of our affiliation.

We are doing ten events this year in bowling, football, golf and cricket.

This is what Digvijay leads. Let us see if football gets off the ground. We will bring football events to India. We've been asked to rejigg the Nehru International soccer tourney and take it up on a long-term contract. It's a great tournament that somehow or the other didn't make its mark which we believe has to do with the quality of brand management that goes into running an international event.

Our partners are in charge of the Asian Football Confederation. They handle the entire Asian circuit and so there is strong expertise already in the group for football. We are enthused about it. We haven't said yes yet (to the Nehru Cup) so I can't definitely say we will be doing it this year. If not we will be doing something else in football because we believe it is the next big opportunity area. We are seeing good vision now in the football management in the country. I believe we are on the right track in building a long-term future for Indian football.

At the World Cup final match 2003: Thawani with Akash Khurana and South Indian film star Venkatesh, who is starring in Nimbus' next Telugu film
"The challenge for us is to be able to handle international distribution of television products, including the documentary"

One would have thought that hockey would have been a better option?

Hockey is a non-television game. It has to do with the inherent nature of the sport. It's too fast moving, the ball is too small, and there are not enough breaks. The same thing happens with squash and badminton. If it is too fast moving a sport, if the object, the ball, is too small, and if you don't have enough breaks, that's death as far as television is concerned.

You want to set up an international TV marketing arm. Could you elaborate on this a bit?

We have been selling our home product from non-traditional places as Israel to traditional places as UK and Mauritius. We have done original productions for people like Carlton in the UK, cable stations. However the key thing is that it is not showing year on year growth. The challenge for us to be able to handle international distribution of television products including the documentary.

Our products are sold in UK, Australia, West Indies, Canada, Japan, Philippines. We are hearing from producers that they lack distribution. Our aim is to clearly replicate our sports television distribution model to other non-traditional areas.

A non-traditional product could be an English language drama by a UK producer. He might have Europe well covered but does not understand Asia, Singapore. Right now we are not thinking of making English shows but of our international film company does well then it could extend itself to television.

We are not starting the international distribution arm in this calendar year. It will take 18 months to set up. Whether we will take on a foreign partner using our Asian strengths or if we will take on a strategic partner into the parent company itself is a question that we have to address. This question will have to get addressed and I will get diluted.

"CAS will lead to a redistribution of income in the broadcasting industry. I think there will emerge a shakeout"

Thawani at Johanessburg in March 2003

Any details on the movies that you're rolling out?

Our first film Sarhad Paar is nearing completion. It will release in October pre-Diwali.

Another film has been put into pre-production and it goes into filming right away targeting a July 2004 release. It is even bigger in terms of investments. Sarhad Paar was a 10-crore film, the new one costs Rs 16 crore.

What about news content delivery?

We have completely pulled out of news. We think the space is so cluttered that margins are impossible to generate. I think everybody is in negative cash flow. I can see there will be a big shakeout.

News is a power source that attracts people. We were in news delivery as we had developed a competency in that area. We made a reasonable profit. We were not interested in the power plays of news. We understood pre-production, engineering, content gathering. We are out of here and we are not coming back in a hurry as we do not see any competitive space opportunity in the near future.

What are your views on the hot topic of the day CAS?

I agree with the industry there will be teething troubles. I agree with the industry that some consumers will wind up paying more than they are paying currently. But I say, 'So What?'

I think it's going to really be a revenue redistribution. At the end of the day the consumer is not going to pay vastly more than what he is currently paying. There is an elasticity in the top maybe one, one-and-a-half million homes in the country. The rest are fairly inelastic. If they were paying Rs 150 they will distribute their money now over fewer channels, but the channels which they want they will get. So what will happen therefore is that those channels will get more of the pie of that Rs 150 than they were traditionally getting. And therefore in that redistribution of income in the broadcasting industry, I think there will emerge a shakeout.

The guys who are delivering a product that people actually want will make money and the guys who are tagging on to this non-addressable system will lose out. Between a NatGeo, Discovery and Animal Planet, I can't see too many homes buying all three. Right now they are getting all three and all three chaps are making very little money. This way the money will now go into the hands of the stronger brands with the better products. Which is really what this business is all about, so I can't see what the big hullabaloo is about CAS.

And taking off from that, the opportunities in a post-CAS era are going to be vastly different from the opportunities currently are.

"Probably October-November would be a good time for us to review whether an opportunity exists to launch Showbiz Channel"

Do you see an opportunity in a post-CAS era to launch your proposed show business focussed television channel Showbiz TV that never took off?

In a beginning of the year presentation in April, we did present a scenario of what might happen in a post-CAS era. And whether we would want to relook Showbiz TV. Because we had already spent several crores (tens of millions) doing the entire channel packaging. We were looking at whether we want to revive that prospect. Because if we were to get one-and-half-million to two million subscribers we would still make money. Because that is a space that has not yet been filled.

"We have completely pulled out of news. We think the space is so cluttered that margins are impossible to generate. I think everybody is in negative cash flow"

Probably within three to six months of the CAS launch we will take a call on that. Showbiz TV is something we are ready with. We could actually launch in about 12 weeks time by just going into the commissioning of the programming that we need to. Because the FPCs, the distribution, the engineering, the channel design, all that is ready.

So we will review it but we are not jumping into the broadcast space. And if we do we will make sure that we have a distribution alliance in place because we do not want to go it alone. We are far more comfortable letting one of the biggies charge us 15-20 per cent off the top to distribute our service. We won't even look for MGs (minimum guarantees) because we are pretty sure what we can make on the advertising side. Probably October-November would be a good time for us to review whether an opportunity exists.

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